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Quarterly bridging lending dips but short-term finance still proves helpful

There was a marginal decline in bridging lending in the second quarter of the year, with bridging lending falling by 6.6% compared to the previous quarter, according to the latest figures.

But annual completions rose by 27.2% to £3.87bn and the value of loans written increased by 10.3%, reflecting the fact that demand for bridging loans – short-term secured loans designed to bridge a temporary cash shortfall when acquiring a property – has soared in recent years.

Bridging loans were once perceived as a ‘last resort’ lending option. But with a growing number of borrowers, including buy-to-let investors, especially those acquiring property at auction, attracted to the greater flexibility offered by alternative finance providers, including no minimum term and no exit fees, it is now expanding rapidly.

Total loan books are continuing to rise, with an increase of 13.1% compared to Q4 2017.

Compared to the end of Q2 2017, the value of loan books has dropped slightly, but is still over £4.2bn.

On an annualised basis applications for bridging finance are up by 16.3% on the year ended June 2017; making up a total of £20.2bn, reflecting the significant growth in the sector.

Benson Hersch, CEO of the The Association of Short Term Lenders (ASTL), said: “Although figures for Q2 2018 are down on the two previous quarters, they remain high. 

“Our members continue to provide flexible and useful services to customers who require finance.  

“The property market may be difficult at the moment, but responsible bridging lenders continue to prosper.”

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